The good news for U.S. retailers is that American consumers aren’t in any mood to stop shopping.
Overall retail sales rose 0.4 percent in October to $718.9 billion, slightly better than the 0.3 percent increase based on consensus estimates from economists. The increase was also on top of upwardly revised data for September, which now pegs retail sales at up 0.8 percent to $716.0 billion. Retail trade sales rose 0.4 percent from September 2024, and were up 2.6 percent from last year.
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Sales at apparel and accessories stores slipped 0.16 percent to $26.24 billion in October from $26.29 billion the prior month. Sales at Department stores slipped 0.18 in October to $10.87 billion from $10.89 billion in September. And sales at nonstore retailers, such as online, rose nearly 0.3 percent to $124.48 billion from $124.13 billion.
Economists at Wells Fargo concluded that October retail sales were solid, and better than expected for retailers. October’s retail sales report is the last one before the start of the holiday selling season, which begins this month. Wells Fargo economists are forecasting a 3.3 percent increase for holiday sales, and while current conditions allow for a decent season for retailers, Holiday 2024 will still likely see the slowest pace of annual sales growth since before the COVID pandemic.
The National Retail Federation, a retail trade group, last month predicted that 2024 holiday spending in the U.S. will grow between 2.5 percent to 3.5 percent over the 2023 season, to between $980 billion to $990 billion. Salesforce, which is expecting a more modest 2 percent growth rate, believes consumer spending will be dictated by the hunt for value as price sensitivity remains an issue. They forecasted four in 10 consumers buying less, and 85 percent trading down for lower-priced goods. Deloitte has forecasted holiday retail sales growth of 2.3 percent to 3.3 percent, a range that’s more in line with trends over the past decade. But the back-to-school sales data also was better than expected, and that’s often considered a good barometer for the consumer mindset during the holiday season.
“November is a key retail month, with the third quarter reporting season and the holiday promotional calendar already in full swing. Fitch expects plenty of value messages across retail to drive sales through Christmas, and will be watching third quarter inventory levels to gauge risk of unplanned markdowns to clear goods in what is likely to be a tough holiday season for many discretionary categories,” said David Silverman, senior director at credit ratings firm Fitch Ratings. “Moving into 2025, we expect to hear more about potential tariffs and retailer plans to offset risk through sourcing changes, product design, or consumer pricing.
Silverman was referring to the expectations of tariff increases under the administration of President-elect Donald J. Trump, who take the oath of office as the 47th President of the U.S. on Jan. 20, 2025.
“The holiday season is coming up fast. A focus on value proposition and customer experience is going to be what it takes to win,” said Nikki Baird, vice president of strategy and product at retail solutions provider Aptos, adding that the American consumer has been more resilient than anyone could have expected.
RRD retail and consumer behavior expert Chip West said October’s increase was likely boosted by lower fuel prices. And as inflation slowed for a number of months, prices in several categories have stabilized, with some even showing declines and offering further relief to consumers, he said.
“The data also looks to be a positive sign as we kick off the holiday shopping season,” he noted. “Promotions and discounts will play a prominent role in holiday shopping behavior as they are key influencers in consumer’s purchasing decisions.”
